Creating your Theory of Change

This six-step approach is for leaders who want a rapid pathway to get their boards, sponsors and staff engaged, and want to leave a legacy of clear intentions and impact.

Creating change is difficult. Whilst the problems to be tackled appear clear enough, the underlying causes, their remedies, and the details of the programs that support those remedies can be challenging to design and even harder to critically analyse, measure and effectively describe to others.

The Theory of Change concept was developed to address these challenges

Fortunately, over the last several decades, researchers and practitioners have developed approaches that help map out social change processes in an effort to make them easier to understand, explore, analyse, review, measure and improve.

One of the most prominent of these concepts is Theory of Change. Organisations use this concept to gain clarity on their intended impacts and the pathways to achieving them.

Theory of Change was popularised by the work of the Aspen Institute in the 1990’s, but has diverse roots within the social sciences. It is what social researchers may describe as an “outcomes-based approach”. That is, it works backwards from intended outcomes to understand the pathways to achieving those results. As it does so, it helps groups to apply critical thinking to the design, implementation and evaluation of initiatives and programs intended to support change.

Leaders need a practical approach that drives engagement and performance

This article approaches Theory of Change from the perspective of a practitioner of business strategy. Such a practitioner is interested in seeking insights that lead to pragmatic actions that enhance performance. 

This approach works for leaders who are focused on medium-term outcomes and on tuning their programs to deliver improved performance and results. 

It is for organisations that are time-poor, and want a model that allows leaders to easily communicate what the organisation is about, and helps to clarify their objectives and the mechanisms through which outcomes are achieved. It is for leaders who want to get their boards, sponsors and other stakeholders engaged, and who want to leave a legacy of clear intentions and impactful outcomes.

The six-step approach outlined below is based on a one-month exercise, with three working sessions and a small number of additional interactions for the organising team and facilitator.

1. Set the context

The critical first step in an efficient and effective Theory of Change process is in the framing. That is, being clear why the leadership has decided to engage with this issue and why it is important right now, ensuring that the process is structured to address the most important questions of prominent stakeholders, and calibrating the process for the organisation’s current stage of development, the scale of problems and solutions the organisation is addressing and the environment it is operating in. 

At this stage, practical considerations also need to be addressed such as being clear about who will participate, what their roles are, the time and resources that will be allocated and the specific outputs (e.g. logic diagram, prose narrative or other) that the project will create.

2. Get on the same page

Step two involves creating a shared understanding among participants of the context, what they should expect out of the process and what the leadership expects from them during the process. This step is also about helping the team to understand more about the background to the Theory of Change concept, the most productive ways to participate and contribute to the development process, and the most important questions that the group will be asked to reflect on deeply over the course of the following month.

Typically this step would include some pre-reading and a brief orientation session to ensure that the project is setup for step three, which is all about outcomes and impact.

3. Focus on impact

The next step goes straight to the end-game and asks two very specific questions: 

(1) Who are your organisation’s primary beneficiaries? 

(2) what is the primary benefit that your organisation delivers to them?

This specific framing is borrowed from management consultant John Argenti’s 1968 book, “Practical Corporate Planning,” yet it is directly relevant to the process of articulating a Theory of Change and mirrors almost perfectly the suggestions of the most prominent Theory of Change research from the likes of the Stanford Social Innovation review (see references at end of this article). 

Whilst Argenti’s work focuses primarily on corporate strategy, his advice, captured in an interview with The Australian in 2016, goes to the heart of the Theory of Change process:

“Never start with mission or vision,” he warns. “Always start with a definition of what you are trying to do for whom and then honestly measure the extent to which you are actually doing it.”

In the article, he goes on to say that, 

“These purpose questions are not difficult to answer for most companies but they are hard to determine for most NPOs (non-profit organisations), and therefore very few NPOs take the trouble to tackle them.”

Argenti’s strategic planning approach has been credited as the source of success for a string of Australian companies, and this author agrees that starting with these specific questions provides a powerful foundation for exploring how to maximise social impact.

Project experience supports Argenti’s claim that these questions pose special challenges for non-profits. One recent engagement involved a well-known institute operating under the auspices of an Australian Federal Government department and reporting to the Minister thereof.

The institute’s primary activities relate to researching social challenges and potential solutions for a specific segment of the Australian community. 

In facilitating a discussion with the Director and Deputy Directors about purpose, we came across a particular challenge: Whilst their work was directed at improving the lives of members of the community, their actual outputs were research studies that were typically consumed by bureaucrats and ministerial advisors. There were so many linkages, outside of their control, between their outputs and ‘on the ground’ community impacts that the team decided to make a distinction between their ‘ultimate’ beneficiaries (the community members whose lives they were seeking to improve through their research and advice) and the ‘primary’ beneficiaries of their work - the advisors to the Minister.

On the one hand, this severely challenged some members of the team, whose personal motivation for working at the institute was the opportunity to enhance the quality of life for a particular segment of the community, but on the other hand, they could see the benefits of getting crystal clear about who they were primarily researching and writing for, and their own specific role within the bigger ecosystem of funders, policy-makers and service delivery organisations that were necessary to bring their research to reality.

There is an art to defining an organisation’s beneficiaries and the benefits it offers. If the target group is too broad, or too remote, it can be hard to identify the common needs of this community that your organisation will be addressing. The more granular you can be in this step, the better the process, and outcomes, are likely to be at completion. Similarly, the more granular you can be about the specific benefit your organisation can offer, the better you will be able to target your resources to deliver your intended impact.

With appropriate pre-work, a structured, two-hour, collaborative, online working session can be sufficient to get the results needed to progress to step four, which involves working backwards to define the chain of logic, and related activities, required to deliver your intended outcomes.

4. Define the logic

With a clear understanding of who your organisation exists to serve (your beneficiaries), and what you are doing to serve them (your benefit), it is time to turn your focus to how to make it happen.

In this step, the project focuses on exploring two concepts in parallel: The set of logical preconditions that must be met in order for your benefit to be delivered (sometimes called a logic model or logic framework), and the corresponding activities and programs your organisation will undertake to ensure those preconditions are achieved.

What are preconditions? Preconditions are conditions which must be fulfilled before other things can happen or be done. For example, if your organisation’s intended impact is to accelerate the growth of social enterprises through social procurement, a necessary precondition is the presence of buyers willing to purchase from social enterprises.

Some or all of these preconditions may be unlikely to be fulfilled without an intervention. Often this ‘market failure’ is why social-impact organisations are established. And so the next step is to identify which activities must be performed by your organisation (or coordinated with a partner) to satisfy each of the conditions. In the example given above, marketing activities may be necessary to make potential buyers aware that they can buy from social enterprises, and the benefits for the buyer, and the community, of doing so.

As with defining beneficiaries and benefits, there is an art to getting the right scope and level of detail for your preconditions and activities. The right balance happens when you have enough detail to derive meaningful insights, but few enough steps that the overall model can be easily recalled by staff and communicated to policy-makers, funders or others.

Defining the logic can require a leap of faith, but, for established organisations, is often still relatively straightforward if the right foundations have been built early-on in the project. A second, two-hour workshop can be enough to get the basics onto the page, with some subsequent work by the organising team to string it all together before the next session. This next step is where it can start to get tricky, as it requires people to get out of their comfort zone, and reveal the assumptions, biases and beliefs that underpin their faith in the model.

5. Document assumptions

Documenting the assumptions, according to some authors, is the single-most important step in the Theory of Change process. The quality of the Theory of Change process rests on making assumptions explicit and making strategic thinking realistic and transparent. Revealing assumptions requires an exploration of deeper beliefs about ‘how the world works’, values, specific analytical approaches and other factors.

In preparation for, and during, this session, the team is invited to reflect on each of the stages in the model - the preconditions and activities so far defined, and ask, “What are we assuming here that is not explicitly documented? Is it reasonable for us to assume this?” and “Why is it reasonable to do so?”

This is a time of real reflection, and a test of the logic and activities laid out in step four. If there are too many assumptions, and they are not readily accepted as valid, then it is possible that the scope of activities needs to be broadened, or the intended impact is beyond the organisation’s capabilities to achieve.

Sometimes, an iterative process is called for, in which specific components of the previous steps are identified as weak-links, isolated and reviewed, before an integrated set of intended impacts, activities and assumptions can be agreed upon by the group.

6. Tell the story

Once the group has established its intended impact, the logical set of preconditions and related activities and a valid set of assumptions, it is time to tell the story.

This critical step can be overlooked all too easily. After all, for the participants in the process, who have had the benefit of being involved each step of the way, the story is clear, but for others it will be important to have a form of words that quickly and convincingly communicates who the organisation exists to serve, and how it intends to serve them.

With the core problem-solving undertaken by the full set of participants, the act of crafting the accompanying story is usually best done by a smaller group of people, often under the direct guidance of the CEO.

In this step, the writer is seeking to clearly lay out the situation in the world that the organisation exists to address, the reason why the situation exists (including why it is so hard to solve), the solution that the organisation has developed to improve that situation, and the compelling reasons why the organisation is confident that its solution will work. 

Developing a clear articulation of the change your organisation is seeking to make in the world, and the plausible mechanisms through which it makes that change is a critical enabler of better conversations with staff, funders and other stakeholders, and offers an opportunity to unlock new ways of working and improving what you do.

This process is relatively simple, and needn't be overly time-consuming, but it can be challenging as it forces organisations to confront potentially unfounded beliefs, and make transparent the underlying logic of their activities. At the same time, the rewards for doing so can easily make the process worthwhile, as programs become better targeted, staff and other stakeholders more engaged, and your organisation is ultimately setup to achieve better performance, and greater impact.

References and further resources

Delivering on the promise of non-profits

Six theory of change pitfalls to avoid

The power of theories of change

Demystifying the theory of change process

Zeroing in on impact

Review of the use of theory of change in international development